Moving tech contrabands around the world is not old news – everyone wants a piece of that AI compute supremacy in this day and age, but because of circumstances, one won’t be able to get it through official channels. Therefore, they depend on smugglers who move this stuff around different places to mask the final destination.
And the latest news revolves around Malaysia, as the KLIA customs department announced they’ve stopped an attempt to move high-value AI hardware through the country by mislabeling the shipment and being transited somewhere else.
During an inspection at the airport’s Free Trade Zone on June 5, customs officers discovered 72 server units containing advanced AI chips with a total estimated value of RM52.9 million (US$12.93 million). According to KLIA Customs director Zulkifli Muhammad, the servers had been declared as “computer components” instead of high-performance AI equipment, allegedly to avoid scrutiny.
Initial investigations found the servers were flown into Malaysia before being scheduled for re-export to another Asian country. Under Malaysia’s Strategic Trade Act, the movement of such high-performance chips requires an export permit. Authorities believe Malaysia was listed as a transit destination to help circumvent international export restrictions before the shipment reached its final destination.
Officials have confiscated the servers while investigations continue, with a Malaysian company involved in facilitating the shipment having also been called in to assist with the probe, although customs declined to reveal the intended destination or additional details because the investigation remains ongoing.
The seizure comes as Malaysia continues tightening oversight of advanced semiconductors after introducing export controls last year on high-performance chips originating from the US. The measures followed growing pressure from Washington to prevent advanced AI hardware from being diverted to China, where the chips could be used for artificial intelligence development.
Last year, authorities investigated reports that a Chinese company operating in Malaysia was using servers equipped with NVIDIA AI chips for AI development, although investigators said they found no evidence of illegal semiconductor trade. Separately, US prosecutors charged two Chinese nationals in August 2025 for allegedly shipping tens of millions of dollars’ worth of AI chips to China through freight forwarding companies in Malaysia and Singapore.
Source: FreeMalaysiaToday
